1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

Purport of claim and appeal

Claim:

1. The reasoning for the court’s explanation concerning this case is as follows, except for the change of the part below 5 pages 3 of the judgment of the court of first instance (hereinafter “the judgment”) as stated in the reasoning of the judgment of the court of first instance. Thus, this is cited in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

D. 1) In full view of the purport of Articles 120(5), 32(1) and (2) of the former Restriction of Special Taxation Act, and Articles 29(2) and (5) and 28(1)2 of the Enforcement Decree of the same Act, where an individual entrepreneur, who is a resident, engages in a conversion into a corporation by investing in kind a business including a business property, the amount of net asset value of the newly established corporation as of the date of the investment in kind in the place of business converted into a corporation by the investment in kind (the total amount of net asset assessed as of the date of investment in kind by deducting the total amount of liabilities including the reserves from the total amount of business property assessed as of the market

The reasons are as follows. A) The purport of the exemption from acquisition tax, etc. is that where an individual entrepreneur’s capital, including business property, is converted into a corporation by investing in kind the business including business property, if the amount of capital of the established corporation is above the net asset value of the relevant business establishment, the exemption of acquisition tax, etc. on the relevant business property is merely a change in the business operation type, and thus it is necessary to impose acquisition tax, etc. on the same entrepreneur, and to encourage such individual entrepreneur’s conversion into a corporation (see, e.g., Supreme Court Decision 2002Du12182, Mar. 14, 2003). Therefore, demanding that the capital of the established corporation be above the net asset value of the relevant business establishment is to be succeeded to as it is by the established corporation (see, e.g., Supreme Court Decision 2012Du17865, Dec. 13, 2012).